The Securities and Exchange Commission's new crypto fundraising proposal treats tokens as free to trade as soon as a buyer acquires them, unless the issuer or another law states otherwise, diverging from a Senate draft that would impose lock-up periods on insiders.
Insiders typically have more information than the public while a token project is still being developed, and their financial incentives do not always align with those of other participants. The SEC's proposal does not include restrictions addressing this gap between insiders and the broader public.
How the Senate draft differs
The Senate's CLARITY draft, dated July 22, takes a different approach to insider token sales:
- Insiders would be required to hold a token for a full year before its network clears a specific control test.
- Once that test is cleared, insiders would face an additional six-month holding period.
- The bill would also limit how much insiders can sell.
